econ ch. 4

B. new capital goods.

Investment spending includes spending on: A. consumer durable goods. B. new capital goods. C. services. D. stocks and bonds.

D. not all economically valuable goods and services are bought and sold in markets.

A drawback of using market values to aggregate the quantities of goods and services produced in an economy is that: A. higher-priced items count more. B. GDP increases when not all goods are produced in greater quantities. C. market prices generally reflect the economic benefit consumers expect to receive from an item. D. not all economically valuable goods and services are bought and sold in markets.

A. real GDP.

A measure of GDP in which quantities produced are valued at the prices of a fixed base year is called: A. real GDP. B. nominal GDP. C. base GDP. D. current GDP.

A. profits, rent, and interest.

Capital income includes: A. profits, rent, and interest. B. wages and salaries. C. earnings of the self-employed. D. capital gains from stock sales.

D. services.

Consumption expenditures include spending by households on: A. exports. B. inventories. C. residential housing. D. services.

A. durables, nondurables, and services.

Consumption spending includes spending on: A. durables, nondurables, and services. B. stocks, bonds, and other financial instruments. C. capital goods, residential housing, and changes in inventories. D. goods and services by federal, state, and local governments.

C. intermediate goods and services, as well as final goods and services.

GDP equals the value added by producers of: A. intermediate goods and services only. B. final goods and services only. C. intermediate goods and services, as well as final goods and services. D. intermediate and final goods only.

C. total output.

GDP is a measure of an economy's: A. domestic price level. B. level of unemployment. C. total output. D. domestic productivity.

B. included in GDP at cost.

Goods and services provided by state and local governments are: A. included in GDP at market prices. B. included in GDP at cost. C. excluded from GDP because they are not sold in markets. D. excluded from GDP because they are publicly provided.

C. is equal to

In the base year, real GDP ______ nominal GDP. A. is greater than B. is less than C. is equal to D. could be greater than or less than

D. used up in the process of; are not

Intermediate goods and services are ______ production and ______ counted in GDP. A. the end products of; are B. the end products of; are not C. used up in the process of; are D. used up in the process of; are not

D. capital goods

Long-lived, produced goods used for producing other goods and services are called: A. consumption goods. B. non-market goods. C. value-added goods. D. capital goods.

C. exports minus imports.

Net exports equal: A. the value added of exports. B. exports plus imports. C. exports minus imports. D. exports minus depreciation.

D. physical volume; current dollar value

Real GDP measures the ______ of production; nominal GDP measures the ______ of production. A. current dollar value; physical volume B. current dollar value; current dollar value C. current dollar value; market value D. physical volume; current dollar value

B. counted in GDP as inventory investment.

The value of goods produced, but unsold, in the current period is: A. excluded from GDP. B. counted in GDP as inventory investment. C. counted in GDP as consumption spending. D. allocated to GDP in future periods when the goods are sold.

D. households, firms, governments, and the foreign sector.

The four categories of final users of GDP are: A. businesses, firms, governments, and the foreign sector. B. households, the Federal Reserve, governments, and the foreign sector. C. businesses, corporations, firms, and farms. D. households, firms, governments, and the foreign sector.

D. consumption, investment, government spending, and net exports.

The four components of aggregate expenditures are: A. consumption, imports, government spending, and net exports. B. consumption, interest payments, government spending, and net exports. C. consumer durables, investment, government spending, and net exports. D. consumption, investment, government spending, and net exports.

A. consumption.

The largest expenditure component of U.S. GDP is: A. consumption. B. investment. C. government purchases. D. exports.

C. gross domestic product.

The most commonly used measure of an economy's output is: A. the rate of employment. B. the rate of inflation. C. gross domestic product. D. the Dow Jones stock market index.

B. revenue; the cost of inputs purchased from other firms

The value added by any firm equals the firm's ______ from selling the product minus _______. A. revenue; expenses B. revenue; the cost of inputs purchased from other firms C. profits; expenses D. profits; the cost of inputs purchased from other firms

B. production.

Total spending on final goods and services in an economy must equal total: A. profits. B. production. C. revenues from all transactions. D. investment.